It has been confirmed that Deutsche Bank has sold close to 60 million shares to the Qatari royal family, in a deal thought to have been worth up to €1.75bn. It is part of the bank’s second largest capital hike ever.
Deutsche Bank has been facing questions about its capitalisation in an increasingly challenging regulatory environment. “We are launching a package of measures designed to reinforce Deutsche Bank’s aspiration to be the leading client-centric global universal bank,” said Jürgen Fitschen and Anshu Jain, co-CEOs, in a statement. “We are decisively strengthening our capital, further improving our competitiveness, and investing in targeted growth initiatives across our core businesses.”
Deutsche Bank has been facing questions about its capitalisation in an increasingly challenging regulatory environment
The bank is issuing around 360 million new shares, 60 million of which have been picked up by Paramount Holdings, one of Qatar’s investment vehicles. The remaining shares, worth around €6.25bn will be offered to existing investors in a rights offering opportunity. This offering us underwritten by a consortium of six banks that have agreed to buy shares investors do not pick up.
Deutsche Bank has faced a number of legal probes over the past few months, chief among them was the investigation over the rigging of benchmark rates and currencies. Added to its worries is the upcoming ECB examination this year, which will assess the bank’s resilience in the face of a crisis. In preparation for these stress tests, Deutsche Bank has been endeavouring to shrink its balance sheet, as well as fortifying its finances. The bank has previously revealed plans to reach a 12 percent return on equity goal by 2016, a year earlier than previously expected.
“We remain committed to Strategy 2015+ and our results to date reinforce that commitment. The package of measures we are announcing today represents a decisive response to both the challenges and the opportunities in a changing macro-economic, competitive and regulatory environment,” said the co-CEOs. “These measures enable Deutsche Bank to position itself for long-term, sustainable success in a time of historic change in the global banking industry.”
Under the terms of the deal the Qatari royal family will pay €29.20 per share, around five percent lower than the closing price on May 16, the last trading day before the deal was finalised. When dividends have been considered, the royal family will receive a 2.5 percent discount on its purchase. It is understood that existing investors will be offered an even greater discount on the remaining 300 million shares available.
The Qatari royal family has been involved in previous deals with Deutsche Bank, most recently acquiring part of the €3bn in new shares the bank issued in 2013.
